Customs, Excise & Service Tax
Appellate Tribunal West Zonal
Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Excise Appeal No. 609 of 2012 – SM
(Arising out of OIA-COMMR-A-/262/VDR-II/2012 dated 01/05/2012 passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-VADODARA-II)
Voltamp Transformers Ltd
VERSUS
C.C.E. & S.T.-Vadodara-ii
WITH
Excise Appeal No. 13706 of 2013 – SM
(Arising out of OIA-PJ/283/VDR-II/2013-14 dated 14/08/2013 passed by Commissioner of Central Excise, Customs and Service Tax-VADODARA-I( Appeal))
| Voltamp Transformers Ltd | ……..Appellant | |
| Makarpura, Makarpura, Vadodara, Gujarat |
VERSUS |
|
| C.C.E. & S.T.-Vadodara-ii | ……Respondent | |
| 1st Floor… Room No.101, | ||
| New Central Excise Building, | ||
| Vadodara, Gujarat – 390023 | ||
APPEARANCE:
Shri Dhaval K Shah, Advocate appeared for the Appellant
Shri Vijay G Iyengar, Assistant Commissioner(AR) for the Respondent
CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR
Final Order No. A/ 11119 – 11120 /2023
DATE OF HEARING: 05.01.2023 DATE OF DECISION: 01.05.2023
RAMESH NAIR
The brief facts of the case are that the appellant have sent copper strips, rods etc on which they have availed cenvat credit for job work and at the job worker end paper insulation process was carried out and job
worker returned the total weight which is equivalent to total input supplied by the appellant. The case of the department is that in the process there is loss and on such quantity of process loss the duty is required to be paid.
- Shri Dhaval Shah, Learned Counsel appearing on behalf of the appellant submits that this issuein appellant’s own case has been decided in their favour vide Order No. A/12507/2021 dated 11.2021 wherein the demand was dropped.
- Shri Vijay G Iyengar, Learned Assistant Commissioner (AR) appearing on behalf of theRevenue reiterates the finding of the impugned order.
- I have carefully considered the submission made by both sides and perused the records.I find that even though the job worker has returned the equal quantity of the goods for the reason that there is an addition of paper which was used for insulation purpose . As regard the process loss it is an invisible loss which arises during the course of job work, hence, the same cannot be charged to the duty. The issue is no longer res – integra as per the decision of this Tribunal in the appellants own case which is reproduced as under:
“4. We have considered the rival submissions. We find identical issue has been decided earlier by the tribunal vide order No. A/11149/WZB/AHD/2013 dated 06.09.2013 wherein following have been observed.
“4. Heard rival submissions and perused the case records. So far as the process of manufacture is concerned, there is no dispute that appellant is sending copper strips and rods to the job workers for drawing Into copper wires and certain waste is generated. It is claim that there is about 2% loss in the process of drawing wires either burning loss or physical waste. It is the case of the appellant that under the provisions of Rule 4(5)(a) of CENVAT Credit Rules, 2004, It is not obligatory to bring back the waste and scrap generated at the job worker’s end. They have relied upon CESTAT Mumbal’s judgment in the case of Mahindra Hinoday Industries Ltd Vs. CCE Pune (supra). In Para 7 of this judgment, following has been held:-
- A reading of the rule clearly indicates that the Asst. Commissioner can impose conditions in the interest of revenue includingthemanner in which duty, if leviable, is to be paid. The
Commissioner has prescribed the manner in which the duty liability has to be discharged vide Trade Notice 38/02 wherein he has fastened the duty liability on the principal manufacturer rather than on the job worker. The waste and scrap Is generated during the course of the job work and it is the Job worker who is the manufacturer of waste and scrap under the Central Excise Rules, 2002 and the liability to pay duty is on the person who produces or manufacturer any excisable goods in terms of Rule 4 of the said rules and duty liability has to be discharged in the manner provided for in rule 8 of the said rules. The liability to pay excise duty and the manner of payment of duty are governed by Rules 4 and 8 of the Central Excise Rules. They are not, in any way, altered or changed by the CENVAT Credit Rules, 2004 which deals with allowing of CENVAT Credit. The CENVAT Credit Rules, 2004 does not create any liability to pay excise duty under any of its provisions. It provides for reversal of credit in case the credit has been taken wrongly. Therefore, under rule 4(6) of CENVAT Credit Rules, 2004 only such conditions can be prescribed which are in conformity with Rules 4 and 8 of the Central Excise Rules, 2002 and not conditions which are repugnant or contrary to the provisions of these rules. In Fag Engineering case (supra), it was held that no duty liability can be fastened upon the principal manufacturer in case of non-receipt of goods in terms of rule 4(5)(a) of the CENVAT Credit Rules, 2004 and the only consequence would be reversal of credit availed on the inputs in case goods on which credit has been taken and which has been allowed to be removed for job workd is not brought back within the time period stipulated. The same legal position was held in the case of Rocket Engineering decided by this Tribunal as also by the Hon’ble High Court of Bombay. In the light of these judicial pronouncements, It has to be held that the principle manufacturer who has supplied the inputs as such or partially processed job workers for further processing cannot be fastened with the duty liability on the waste and scrap generated at the job wokers primises and said liability false on the job workers who have actually manufactured the waste and scrap. In case, the department wanted to recover duty on the waste and scra, then the demand should have been raised on job workers as has been held in Alucast Foundries (Supra)
- Further, In the case of the appellant decided by CESTAT Ahmedabad on 23.01.2013 (2013-TIOL-629-CESTAT-AHM) following has been held:
- 1 find that both the lower authorities have not accepted this fact and held that the provisions of Rule of 4(5)(a) of CENVAT Credit Rules envisages the receipt of entire goods back from the job workers. In my view, the said findings are not in consonance with the law as has been laid down by the Tribunal in the case of Bharat Radiators Ltd (supra), Vema Metal & Conductors Ltd (supra), Tata Motors Ltd (supra). I find that the judgment of the Tribunal in the case of TataMotors Ltd (supra) is a Division Bench judgment and they have relied upon the decision in the case of Bharat Radiators Ltd and have recorded in Para 7 the following findings:-
“7. We find that Tribunal in the case of Bharat Radiators (supra) held that the credit cannot be denied in respect of the process loss at the hand of job worker. In view of the above we find as
the Revenue has not denied the fact that the quantity which was found short on account of processing hence the demand is not sustainable hence set aside.”
- I also find that Hon’ble High Court of Gujarat in the case of CMC (India) (supra) in para 7 have recorded the following findings:-
“7….Here, there is a concurrent finding of fact by both the authorities and there is no finding by the authorities to the effect that the loss occurred was unreasonable and both the authorities have also verified that the loss claimed by appellant was based on the records and it would not amount to clandestine removal of goods. Even otherwise, there was clear admission that the goods were clandestinely removed. Since this being a finding of fact, we are of the view that no substantial question of law arises out of the order of the CESTAT.”
- In the present case, the loss on account of waste and scrap is only 2% which has not been argued to be unreasonable by the Revenue. It is also not the case of the Revenue that waste and scrap generated has been clandestinelyremoved or that no waste and scrap is generated at all in the processes undertaken by the Job worker of the appellant. There is also no binding clause in Rule 4(5)(a) of CENVAT Credit Rules, 2004 that any loss of inputs by generation of waste and scrap has to be compensated by reversing equivalent credit taken on the virgin metal. Further, It has been held by co-ordinate Bench in the case of Mahindra Hinoday Industries Ltd. Vs. CCE Pune-I (supra) that demand if any on waste and scrap has to be raised against the manufacturer job worker and not upon the raw material suppler. In view of the above observations, appeal filed by the appellant is ”
Relying on the aforesaid decision in tribunal and appellant’s own case involving same issue. We find the impugned order cannot be sustained.
- The appeal is allowed and impugned order is set ”
- In view of the above judgment which is directly on the facts of the present case, the impugned order is not sustainable, accordingly, the same is set aside. Appeals are allowed.
(Pronounced in the open court on 01.05.2023 )
RAMESH NAIR MEMBER (JUDICIAL)
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